Aug 02, 2015

Raymond James Projects US Energy Independence As Early As 2020

HOUSTON (Dow Jones)--The often-mentioned goal of U.S. energy independence could become reality by the end of the decade, according to analysts with Raymond James.

As early as 2020, net U.S. crude imports will "reach essentially zero" thanks to booming oil production in Texas and North Dakota, growth in biofuel output and rapidly falling demand, two analysts with the research firm said in a report released Monday.

Imports might continue in the form of refined products and heavy oil destined to refineries that require it since most U.S. oil production will be light, the analysts said.

But, if allowed by authorities, exports could offset imports, and the new energy status could nearly wipe out the U.S. trade deficit.

"Domestic oil demand will be entirely met by domestic oil supply for the first time since World War II," said Pavel Molchanov, one of the authors of the report. This scenario would be "historic, epic, a big deal," he added.

Many forecasters, including the International Energy Agency and the U.S. Energy Information Administration, project U.S. crude imports to decrease significantly in the coming decades, but they say the U.S. will need millions of barrels a day as far as 2030. Raymond James's projections underscore a belief that U.S. oil production is growing faster than most expected, thanks to the bounty unleashed by hydraulic fracturing.

The comments come during a bout of anxiety over high gasoline prices, which have brought talk of energy independence to the forefront on the presidential campaign trail.

The eventual elimination of U.S. crude imports has big implications, according to Raymond James. To start with, the reduction in the bill for foreign oil combined with re-industrialization driven by the low cost of natural gas could reduce the U.S. trade deficit by 82% in 2020, the report said.

Also, global oil prices could get a break thanks to a looser oil market, Molchanov said. Raymond James revised down its projection for long-term Brent crude prices last February to $95 per barrel from about $125 per barrel to take into account the surge in U.S. oil output, Molchanov said.